EU CREDIT DAILY: Buffeting Winds; VW Earnings, IG Ahead, Rio Cut
(Bloomberg) -- While broad underpinnings of credit mkts remain firm, sentiment may be buffeted by a range of macro and geopolitical factors this week, Bloomberg strategist Simon Ballard writes.
- Volatile swings in Asian equities overnight highlights ongoing susceptibility of risk assets to China growth story
- Focus on ECB meeting Thurs; no change in rates expected, but new staff forecasts to help gauge inflation pressure going forward
- Geopolitical tension intensifying in U.K. ahead of June 23 referendum; GBP risk assets may maintain weak bias over coming month although GBP credit returns have been robust ytd (UR00 index +1.2%)
- Volkswagen earnings today beats expectation; may be positive catalyst for VW spreads as hint at stabilization post emissions scandal
- Risk Appetite model shows low volatility around U.K. bank holiday
- CDX IG closed -0.1bps at 76.548 in overnight session; iTraxx Asia Ex Japan IG currently +0.12bps at 140.456
NEWS
- Corporate News
- Volkswagen 1Q Profit EU3.44b; Reiterates 2016 Forecast
- Sun Pharma Falls Most in Two Months After Profit Misses Views
- Alrosa 1Q Ebitda Jumps 38% Y/y to 59.3b Rubles
- Financial News
- Delta Lloyd Starts Van Lanschot Offering to Boost Capital
- IG Group Sees FY Earnings to Be ‘Slightly’ Ahead of Views
- Credit Agricole Assurances to Buy 10% of Elis for EU192m
- PayPal to Halt Turkey Ops on Regulator Refusal of Application
- ASB Bank Says NZ Credit Growth Raises Risk Rate Cut Is Delayed
- Credit Rating News
- Rio de Janeiro Cut to B- From BB- by S&P, Outlook Negative
- Fitch Removes Zoomlion from Negative Watch, Affirms Ratings
- S&PGR Affirms BlueScope Steel ’BB’ Rtgs; Otlk Stable
- S&PGR Affirms And Then Withdraws AGL ’BBB’ Rtg At Co. Request
- Fitch Affirms Taiwan Power at ’A+’; Outlook Positive
- Fitch: China Property Rating Downgrades Driven by Divergence
- Other News
- Aussie Bond Holdings Cut by Foreigners to Lowest Ratio Since ’09
- Goldman Sees 70% Chance of China Shares Joining MSCI in June
- Doors Open to Foreign Banks in Somalia After Half-Century Hiatus
ANALYST VIEWS
- Focus has been totally around primary and the ECB. We expect the spread markets to show some significant tightening - whatever the ECB decides it feels it can lift from the secondary market: creditmarketdaily.com
NEW ISSUES
- No New Issues Monday
- European IG credit pipeline here and HY credit pipeline here
- Issuers exposed to S-T rollover and interest-rate reset risk here
- NOTE: Simon Ballard is a credit strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.
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